Question
Company B offered common shares on a subscription basis to several individuals, giving them the right to purchase 50,000 shares at $8 per share. The
Company B offered common shares on a subscription basis to several individuals, giving them the right to purchase 50,000 shares at $8 per share. The individuals have accepted the companys offer and made the initial payment of $160,000. After the six months, the individuals did not pay the remaining amount of the subscription price, and the subscription contract was defaulted. Based on the contract, the company did not refund the initial payment to the individuals, but it issued common shares for the initial payment.
Required: (a) Prepare the journal entry to record the subscription of common shares.
(b) Prepare the journal entry to record the defaulting of the subscription.
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